AB5 + Salon Owners: How Boulevard Can Help
Fact: Assembly Bill 5 (AB5) went into effect January 1, 2020 in California, and has real implications for the beauty service industry.
AB5 requires certain employers to classify and treat all workers, including independent contractors, as employees, however, certain occupations are exempt from AB 5 regulations, including hairdressers, manicurists, licensed barbers, and estheticians.
That said, even though hair salons are exempt, there are still other tests that dictate how employees are classified. Meet the Borello multi-factor test.
Why should you care?
It’s important that business owners not only familiarize themselves with these regulations, but also properly organize and manage the way they both classify and compensate their employees
When a worker passes the Borello 11-factor test and is classified as an Independent Contractor, the employer and employee agrees to the following:
The salon cannot have any say in how the services are performed
The renter/stylist must have their own license
The renter/stylist must carry their own insurance policy
The renter needs to collect the customer’s payments instead of having customers pay through a front register
The renter should carry their own supplies needed to perform their services
The rent may either be a fixed amount or may be a percentage of the renter’s sales.
How Boulevard Can Help
Let's say Salon X is a blended salon and employs a mix of independent contractors and employees. Per Borello regulations, clients must pay their service provider directly if they are independent contractors.
Enter Boulevard's Multi-Merchant Accounts functionality. Boulevard provides merchant IDs to all independent contractors, so when client pays, Boulevard automatically deposits funds into the professional’s merchant account according to the revenue generated.
Also at Salon X, contractors must also pay a fee to their employer for renting a chair.
Again, using Multi-Merchant Accounts, Boulevard provides merchant IDs to all independent contractors. And when a client pays, Boulevard automatically deposits funds into the professional’s merchant account.
Under Client Profiles: The employer simply adds the independent contractor as a client.
For Products: The employer adds a product for “Rental Fee” so they can charge contractors what they are owed.
Reports: Sales Summary report and payments and refunds report breaks out each merchant account.
Learn more about how Boulevard can help:
Client Profiles - to add an independent contractor as a client to charge them rental fees
Products & Inventory to add a rental fee product to charge independent contractors
Learn more about AB5: